Item 2. Unregistered Sales of Equity Securities
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Sales
of Securities
There
were no sales of unregistered securities during the quarter ended December 31, 2023, and from the period from September 30, 2023, to
the filing date of this Report.
On December 29, 2023, the Company issued 166,668 shares
of common stock as compensation to the non-executive members of our Board for a fair value of $5,000 for the services rendered during
the first quarter of fiscal year 2024 and 90,417 shares to an independent contractor with a fair value of $3,000.
Common Stock Issued Under Equity Incentive Plan
We issued 262,486 shares of common stock for 369,997
RSU’s that vested during the three months ended December 31, 2023. The number of shares sold by these employees to fund payroll
taxes for the three months ended December 31, 2023 was 112,594.
Common Stock Issued Under Tender Offer
On December 26, 2023 we closed a tender offer to exchange
approximately 55.5 million 2021 Investor Warrants for shares of common stock and new warrants (“November 2023 Warrant Exchange”).
The November 2023 Warrant Exchange had 43,538,501 2021 Investor warrants tendered (78.4% of the outstanding 2021 Investor Warrants) resulting
in the issuance of 7,270,958 shares of common stock and 17,415,437 new warrants (“New Warrants”). The New Warrants include
these terms:
● Each
(1) New Warrant can subscribe for and purchase one (1) share of common stock from the Company
at an exercise price of eighteen cents ($0.18) on or before December 29, 2028.
● The
New Warrant can be exercised on a cash or cashless basis.
● The
New Warrants will automatically convert if the common stock trades at a bid price equal to
or greater than thirty-six cents ($0.36) for thirty (30) consecutive trading days. New Warrant
holders will be notified if the automatic conversion is triggered and will be provided with
twenty (20) trading days to deliver a notice of exercise to the Company.
● The
New Warrants will be adjusted for stock dividends and stock splits should such an event occur
during the term of the New Warrant.
The weighted average warrant fair value of the 2021
Investor Warrants successfully tendered, as determined using the Black-Scholes option valuation model, was in excess of the value of the
consideration paid by the Company to the 2021 Investor Warrant holders who successfully tendered their warrants during the November 2023
Warrant Exchange. We did not recognize a gain as a result of the November 2023 Warrant Exchange.
The assumptions used to estimate
the weighted average warrant fair value for the successfully tendered 2021 Investor Warrants include:
● We
estimated volatility based primarily on historical monthly price changes of the Company’s
stock equal to the expected life of the warrant.
● The
risk-free interest rate was based on the U.S. Treasury yield in effect at the time of grant.
● The
expected warrant term was the number of years the Company estimates the warrants will be
outstanding prior to exercise based on expected historical exercise patterns.
After the November 2023 Warrant Exchange, we had a
total of 43.2 million warrants outstanding comprised of 5.4 million from 2018 issued to placement agents, 8.4 million from 2021 issued
to placement agents, 12.0 million remaining 2021 investor warrants, and 17.4 million new warrants issued on December 26, 2023.
Purchases
of Equity Securities by the Issuer and Affiliated Purchasers
There were no purchases of equity securities by the
issuer or affiliated purchasers during the quarter ended December 31, 2023, and from the period from September 30, 2023, to the filing
date of this Report.
As noted above, on December 26, 2023 we closed a tender
offer to exchange approximately 55.5 million 2021 Investor Warrants for shares of common stock and new warrants (“November 2023
Warrant Exchange”). The November 2023 Warrant Exchange had 43,538,501 2021 Investor warrants tendered (78.4% of the outstanding
2021 Investor Warrants) resulting in the issuance of 7,270,958 shares of common stock and 17,415,437 new warrants (“New Warrants”).
The New Warrants include these terms:
● Each
(1) New Warrant can subscribe for and purchase one (1) share of common stock from the Company
at an exercise price of eighteen cents ($0.18) on or before December 29, 2028.
● The
New Warrant can be exercised on a cash or cashless basis.
● The
New Warrants will automatically convert if the common stock trades at a bid price equal to
or greater than thirty-six cents ($0.36) for thirty (30) consecutive trading days. New Warrant
holders will be notified if the automatic conversion is triggered and will be provided with
twenty (20) trading days to deliver a notice of exercise to the Company.
● The
New Warrants will be adjusted for stock dividends and stock splits should such an event occur
during the term of the New Warrant.
We did not recognize a gain as a result of the November 2023 Warrant Exchange.
After the November 2023 Warrant Exchange, we had a total of 43.2 million warrants outstanding comprised of 5.4 million from 2018 issued
to placement agents, 8.4 million from 2021 issued to placement agents, 12.0 million remaining 2021 investor warrants, and 17.4 million
new warrants issued on December 26, 2023.
19
Table of Contents
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM
4. MINE SAFETY DISCLOSURES
Not
applicable.
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